How much does it cost to have 90% employee turnover?

 Though it may be unbelievable, Congress showed some business sense by passing the Professional Services Clause.  Congress knew that employee turnover often costs the government huge sums of money so the Professional Services Clause was written to ensure a stable and quality workforce.  In one case, the courts interpreted this to mean that a company that wins a bid for an ongoing project must submitted a bid that shows they intend to offer their employees a “compensation package generally consistent with the salaries being paid by the incumbent contractor”. 

In McMasters v. Green, Mr. McMasters argued that if the company was required to submit a bid that showed the compensation package was consistent with the previous compensation then it is logical the company should be required to pay their employee consistent with the previous compensation package.  The appellate court used lawyer evasiveness to avoid addressing Mr. McMasters’ argument.

Here the gobbly gook they used to avoid answering that question, “Thomas further asserts that since Serco Policy No. HR-27 states that Serco provides wages in accordance with applicable laws, and since Serco allegedly illegally reduced "employee salaries covered by FAR 52.222- 46"1, Thomas is entitled to prevail on his breach of implied contract claim. We note that before the trial court, Thomas directed the court's attention to CRAssociates v. United States, 103 Fed.CI. 23 (2012). In his brief and reply, he directs our attention to CRAssociates v. United States, 102 Fed. Cl. 698 (2011). In Defendants' brief, they assert that CRAssociates v. United States, 95 Fed. CL. 357 (2010) does not apply herein”

Ignoring the purpose of the Professional Service Clause cost taxpayers over $1 billion dollars in cost over runs and schedule delays.  Because the Ohio courts failed to correct the issue, it is almost certain this mistake will be made again in the future. 

The policy that caused contractors at WPAFB to reduce salaries by more than 40% covered more than 600 positions at the Air Force Base.  The examples below involve six of these people; just 1%.  The reduction in salaries amounted to about $240,000 but the waste totals nearly $200 million.[1]:

Example 1: The savings of at least $4 million would not have resulted had Mr. McMasters not chosen to trust the judicial system to verify employees are treated equally under the law.  Fortunately for the government, Mr. McMasters is a fiscal conservative and was able to delay the payment of half his salary while spending the other half on court costs in order to promote sound government financial decisions.  Because of this capability Mr. McMasters was still on the job after all other contractors left the development program.  When the government made policy changes that were impossible to meet, a decision to delay an important aspect of the program was made.  This three-month delay would have cost the government $4 million dollars in payments to the developer while no progress on the program could be made.  Mr. McMasters was the only one on the program that understood this delay was due totally to improperly conceived government paperwork and convinced the government parties to suspend implementation of that policy until corrected.  This allowed the program to proceed as scheduled and avoid the $4 million delay. 

Example 2:  The government lost at least $48 million dollars and two years of development due to the loss of four contractors who left because of the violation of the Profession Services Clause. 

When the government undertakes a project, they do what is called an Analysis of Alternatives (AoA).  For this program three solutions were examined.  Approach (C) fulfilled every requirement but was too expensive.  Approaches (A) and (B) were considered 80% solutions; each with drawbacks and each with advocates that believed one approach was better than the other.  In this case the engineering team at WPAFB preferred (A), while the requirement team in Florida preferred (B).   Approach (A) was chosen.

Two years and $48 million into the development of (A) the only issues with the program were those known at the time (A) was selected.  (A) was going as predicted meeting the 80% criteria that was deemed most important.  However, the violation of the Professional Services Clause caused the exodus of the advocates that were on the team at WPAFB.  Seeing their opening, the requirement team in Florida – which was not affected by the violation of the Professional Services Clause – stopped the development of (A) and re-directed the program to work on (B). 

 

                                             The Swiss cheese model[2] of accident causation is a model used in risk analysis and risk management, including aviation safety, engineering, healthcare, emergency service organizations, and as the principle behind layered security, as used in computer security and defense in depth. It likens human systems to multiple slices of swiss cheese, stacked side by side, in which the risk of a threat becoming a reality is mitigated by the differing layers and types of defences which are "layered" behind each other. Therefore, in theory, lapses and weaknesses in one defense do not allow a risk to materialize, since other defenses also exist, to prevent a single point of failure.                                                   

 

Example 3:  The loss of a $120 million-dollar airplane can be attributed to the departure of the primary test manager which occurred because of the violation of the Professional Services Clause.

In the months prior to his departure, the retired Lt Col with over ten years of test experience, would come into the test section meetings expressing his concern about the modifications occurring for an upcoming test flight.  Two weeks before he departed, he irritably expressed his concern a serious accident might occur.  Six weeks after he departed the $120 million airplane suffered a mishap that prevented it from flying again.  

The program had hired a replacement test manager four weeks before the mishap.  The individual had no flight test experience. Though the individual did attend program meetings, at the time of the accident he had still not been fully in processed to the unit and could not sign onto base computers to look over documents.  This is a prime example of why Congress implemented the Professional Services Clause which seeks to increase program stability and reduce turnover. 

One of the primary reasons for the initiation of the lawsuit McMasters v Green was to prevent the re-occurrence of policies that resulted in the waste of more than $1 billion dollars of tax payer money.  Instead the Ohio courts sanctioned these wasteful business tactics through the courts use of evasive tactics.

 

[1] Examples that contain the names and other details about the programs will be written and submitted to Public Affairs.  Hopefully, they will be cleared to so you can verify the veracity.  If they are cleared I will post those versions here.   

[2] Swiss Cheese Model

 

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